Credit Cards for College Students

Start Building Your Credit with Wise Financial Decisions

Buying on plastic has never been easier. If you are a college student you will be solicited for all manner of credit cards much more vigorously than perhaps anyone else. What you do with a credit card and any other financial accounts will make all the difference in your world.

Easy Come, Easy Go

If you are one of the millions of students that not only carry federal student loans, but also took out private loans from the bank to fund your college education, then chances are you know how heavily your bank markets to students just like you. Yes, they help you out with loans and get you all set up with various perks such as online account access, but they are also in business to make money. Don't forget that your bank is a business.

CitiBank, Bank of America, Sun Trust, you name it and all these reputable lending institutions have loans to offer you as well as those hip, little plastic cards designed specifically to lure the college student.

Targeting Young Spenders

Outside of your bank, there are other companies soliciting you, too. While their junk mail may not end up in your campus mailbox, no doubt you will come into contact with their guerrilla-style marketing. On youth and student-oriented websites there are paid ads for student credit cards. Their catch? Incentives are attractive; gift certificates for DVD rentals, cash back bonuses if you spend money at your favorite retailers and so on. So, you apply for a credit card and actually get money to spend?

By many accounts students are now one of the most targeted populations of all consumers.

Credit Card Reality

The reality for most college students is that a credit card is not that easy to get, at least from a reputable lender. Most college students as strapped as they are often think just having a card will ensure they can "make it" financially. But in order to get one of those "low interest rate" cards you will need to have good credit. Most students have little or no credit, which means you may have to find a co-signer in order to qualify for the good deal.

Finding a Cosigner

If you find you need the signature of a co-signer to qualify for your bank's good credit card deal you may be able to ride on the good credit of your parents or a guardian if in fact they can supply it and are willing. But not everyone has good credit. Many adults carry more than their fair share of credit card debt as it is. Not only that, but you may be too much of a financial risk. A credit card in the hands of a student about to hit a college campus can be a financial disaster waiting to happen. If you are fortunate enough to have a parent or other qualified individual sign with you, then make sure you only use it in the event of a real emergency.

How to Build Credit

A student credit card can be used to your advantage if you are careful and plan appropriately. Building credit with a credit card is a fine way, but only if you know how to tend to your budget. If you must have a credit card make sure you examine the fine print associated with it:

• APR or annual percentage rate - there may be an "introductory" APR which means you also want to know how long that deal will last and what the normal APR will be.
• Annual fee?
• Credit limit.
• Fee for overage and late payments - these can break you.
• Incentives and how to redeem them.
• Extra fees, charges.

The best practice is to find the lowest interest rate you can, a card without an annual fee and no outrageous credit limit, just enough to get you by in an emergency. If you're really good with a credit card, you may make small purchases and pay them off immediately. After a year or two of good credit shop the card offers for the more attractive low interest deals and continue securing yourself better credit.

Credit Report

The federal government now makes it possible for every American to receive a free credit report from each of the reporting agencies a year. The three main credit bureaus are Experian, Equifax and TransUnion. There are plenty of alternative sources, mostly lending companies, who promise to fill your order for your free report, but make sure you only order your credit report from the Federal Trade Commission's website.

Your credit report determines a credit score from which lenders make the decision to extend you credit. It is how you will be rated for a mortgage, car loan, boat loan, anything you purchase on credit, for the rest of your life. Your credit report is extremely important. Make sure you take advantage of the free copy for which you're eligible each year. Take the time to make sure you do not find any suspicious activity recorded. If you do, report it to the agency.

Student Identity Theft

You've no doubt heard a lot about ID theft in the last few years, but it's always been someone else's dumb luck, right? Increasing numbers of students are being targeted now and you could be one of them. Don't give your credit card or bank information to anyone unless it's your actual bank and you know it for a fact. Your lender will never ask for account numbers or passwords online, so don't give them out. If you suspect suspicious activity secure a copy of your credit report and contact your bank. It's better to be overly cautious then to find someone has all your financial information and is using to drain you dry.

Your Credit Future

Before you apply for a student credit card be realistic about your intentions for its use. Keep your sights on the years immediately following school - you may already be indebted to any number of creditors for student loans. If the rest of America is any indication, it's easy to get carried away with a credit card. Repairing bad credit, while possible, could take you years.